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Telus Misses Profit Estimates After Subsidizing Smartphones

Feb. 10 (Bloomberg) -- Telus Corp., Canada’s third-largest
wireless carrier, reported fourth-quarter profit that missed
analysts’ estimates as the company spent more to subsidize the
smartphones with which it is wooing customers.

Profit, excluding tax adjustments and impairment charges,
rose to 75 Canadian cents (75 cents) a share, from 67 cents a
year earlier, Vancouver-based Telus said today. Analysts
projected 79 cents, the average of estimates compiled by
Bloomberg. Sales rose 5.3 percent to C$2.69 billion, in line
with estimates.

Telus and competitors sell smartphones such as the Apple
Inc. iPhone at a loss to attract contract subscribers who spend
more each month surfing the Web and downloading video than users
of cheaper handsets. Its cost of acquiring each new customer
rose 8.5 percent to $421 as it fought with BCE Inc., Rogers
Communications Inc. and a slew of new entrants.

Telus fell 1.6 percent to C$56.30 at the close in Toronto,
the biggest drop since Oct. 26. The shares have dropped 2.3
percent this year.

BCE, Canada’s No. 2 wireless carrier, yesterday reported
earnings that missed analysts’ estimates as it spent more on
device subsidies to keep customers from switching to new
carriers Wind Mobile, Public Mobile and Mobilicity. Rogers
Communications Inc., the largest carrier, is scheduled to
reports result on Feb. 22.

Subscribers Added

Telus added 148,000 wireless subscribers on contracts last
quarter, more than the 145,000 predicted by Maher Yaghi, an
analyst at Desjardins Securities Inc. in Montreal. BCE gained
131,986 customers on that basis.

Telus’s average monthly revenue per wireless customer rose
1 percent to C$59.08, as a 43 percent surge in data spending on
smartphones and tablets made up for a decline in call revenue.
Yaghi, who recommends holding the stock, had estimated C$59.80.

Telus today is expanding its LTE, or long-term evolution,
network to 14 Canadian cities to accommodate rising data demand.

Net income rose 4.9 percent to C$237 million, or 75 cents a
share, from C$226 million, or 70 cents, a year earlier.

Telus said today it’s selling its 51 percent stake in
TELSK, a Korean joint venture, as part of a strategy to divest
assets that aren’t core to its operations. The unit had revenue
of about C$40 million last year, and almost C$10 million of
earnings before interest, taxes, depreciation and amortization.

(Telus began a conference call at 11 a.m. New York time.
Click on T CN <Equity> CWP <GO> and go to the link under
Investor Relations to listen.)